IIFL Cummins India Ltd

1. IDEA2ACT : Cummins India Reco Price 12-months Target Price BUY @ ₹ 756-788 ₹ 914 Cummins India (KKC) is a 51%-owned subsidiary of Cummins Inc, USA and is the leading manufacturer of diesel engines used in generators in India. Cummins has eight manufacturing facilities in Maharashtra and Gujarat. The company produces ~40,000 engines annually for the industrial sector and ~10,000 engines annually for power generation. The product range includes diesel engines from 15kVA to 2,000kVA for various power/industrial uses. The business is organised into four segments: power generation, industrial engines, distribution, and exports. Well placed to leverage the capex upcycle Bullish on domestic demand outlook: Cummins is enthused with the sustained improvement in demand across most end-markets which has led to a strong recovery in data-centres, industrial, infra aiding Powergen, while the recovery in construction and mining is driving growth in the industrial segment, offsetting Railways, which is trailing by 6-8 months. Early indicators of revival in capex are stronger than in the previous cycle. Structural tailwinds to data-centres, construction (infra), PLI-linked manufacturing capex and recovery in pockets of real estate, with a relevant and competitive product portfolio, favourably place Cummins to ride the recovery wave in the capex cycle. Long-term growth levers − Well oiled: Cummins is set to benefit from the rising adoption of emission control across global markets, with its refreshed and cost-competitive portfolio. Strong domestic manufacturing capabilities and consolidation in the engine space are expected to drive long-term growth for Cummins (exports & domestic). Further, access to global technology platforms will enable the company to offer hybrid/green power solutions (battery/hydrogen-led) as & when the domestic market is ready. Focus on growth with profitability • The company has completed major capex across all plants and is looking to invest only in new product development over the next couple of years. Cummins will continue with its healthy dividend pay-outs (70-80%).

2. • The company believes that its differentiated products and focus on the margin profile of products (along with cost-saving programmes like ACE) will enable improvement in return ratios, with recovery in the industry capex. • The company is aiming for double-digit growth over 5-7 years for the base business (12-14% Cagr), with enough projects to add momentum. Technically, the stock is trading in a strong higher top higher bottom chart structure, indicating a positive bias according to the dow theory. The stock has given a flag pattern breakout on the daily chart and is showing positive momentum on the MACD Histogram. If the current impulse move accentuates the way it should, we expect Cummins India trend higher and test our immediate target price of Rs 914 during the next 1-Year. We recommend a Buy Rating on the stock. Previous Recommendations: Targ et Price 241 Reco Price Date Stock Name P & L % Status 26-May-20 Emami Limited 205 18% Target Achieved Target Achieved (₹225 + Dividend ₹10.15 exdate 6th Jul 2020) Target Achieved Target Achieved Target Achieved Target Achieved Target Achieved Target Achieved Target Achieved Target Achieved Open Target Achieved Target Achieved Target Achieved Target Achieved Target Achieved Open Open Open 2-Jul-20 2-Jul-20 15-Jul-20 30-Jul-20 11-Aug-20 13-Aug-20 18-Aug-20 28-Aug-20 14-Sep-20 1-Oct-20 16-Oct-20 28-Oct-20 2-Nov-20 3-Dec-20 16-Dec-20 6-Jan-21 15-Jan-21 5-Feb-21 ITC NHPC HCL Tech INDIGO JB Chemicals & Pharmaceuticals UPL Crompton Consumer Sudarshan Chemical Apollo Tyres Manappuram Finance Ltd Cyient Ltd Amara Raja Batteries SIS (I) Ltd Bharat Electronics RBL Bank Alembic Pharmaceuticals Hindustan Petroleum Corporation Ltd State Bank of India 201 19.5 610 920 750 480 256 474 114.5 155.5 370 770 363 112 233 1075 229 351.5 235 24 695 1074 867 555 299 557 138 186 440 898 423 139.0 273 1252 274 429 17% 23% 14% 17% 16% 16% 17% 18% 21% 13% 19% 17% 17% 24% 17% -14% 6% 11%

3. Disclaimer: Investments in securities market are subject to market risks, read all the related documents carefully before investing. There is no assurance or g uarantee that the investment objectives shall be achieved. IIFL does not guarantee any assured returns on the investments recommended herein. Past performance of securities/ instruments is not indicative of their future performance. IIFL makes no representation/s or warranty/ies, expres s or implied, as to the accuracy, completeness or reliability of any information compiled herein, and hereby disclaims any liability with regard to th e same, including, without limitation, any direct, indirect, incidental or consequential loss. You shall verify the veracity of the information on your o wn before using the information provided in the document.Investors are requested to review the prospectus carefully and obtain expert professio nal advice. IIFL group, associate and subsidiary companies are engaged in providing various financial services and for the said services (including the service for acquiring and sourcing the units of the fund) may earn fees or remuneration. IIFL Group | IIFL Securities Ltd., IIFL House, Sun Infotech Park, Road No. 16V, Plot No. B-23, MIDC, Thane Industrial Area, Wagle Estate, Thane - 400604. CIN: 99999MH1996PLC132983 Tel.: (91-22)2580 6650. Customer Service: 40071000.Stock Broker SEBI Regn: INZ000164132. NSE: 10975 BSE: 179 MCX: 55995 NCDEX: 01249 Depository: INDP1852016. MF Distributor ARN: 47791. PMS SEBI Regn,: INP000002213. Investment Adviser SEBI Regn. INA00000623. Research Analyst SEBI Regn: INH000000248. Loan products are offered by IIFL Finance Ltd. & IIFL Home Finance Ltd. Kindly refer to www.indiainfoline.com for detailed disclaimer and risk factors.